In line with increased regulator scrutiny and consumer pressure for transparency the emphasis on environmental, social, and governance (ESG) is a sharp strategic focus in boardrooms across the globe. Over 80% of consumers would like to be able to access information about the sustainability of the goods and services they use but they are frustrated with the lack of trustworthy insight available.
According to the PwC ESG report, 91% of business leaders believe their company has a responsibility to act on ESG issues and 86% of employees want to work for companies that care about the issues they regard as important. PwC report that ESG oriented assets will more than double in the US and triple in the Asia Pacific by 2026.
This growing call for companies to provide reliable transparent information to stakeholders about their commitment to ESG requires companies to consider how they might initiate or improve their current ESG reporting.
ESG transparency and the bottom line
The so-called “Triple Bottom Line” measures the benefits of ESG through the lenses of social, environmental and financial outcomes through a hard accounting framework and is considered the gold standard of responsible corporate practice. Investors, shareholders, regulators and competitors increasingly rely on these measures to not only assess the sustainability of an enterprise but also its risks, efficiencies and opportunities. Sustainability and a commitment to ESG are simply put, good business.
Once a business has decided to pursue the implementation of ESG, they must address the initial challenge of how they will manage transparency, the engagement of their stakeholders and share the financial and organisational impacts of their endeavours. Typically, the first step is to initiate ESG reporting to establish a baseline status so subsequent reports can quantify progress. This reporting then enables the value of the company’s ESG activities to be translated onto its balance sheet in the form of a triple bottom line assessment.
What is an ESG report?
An ESG report must deliver quality relevant insight, be easily understood, verifiable and show progress and achievements relative to the standards that are compulsory or those which are optional. While some standards are global across all industries others may be specific to unique geographies or industries, the standards governing financial services vary substantially from those that apply to food manufacture. To meet this demand, there are a plethora of platforms offering services to assist with ESG reporting, platform selection should be based on a needs analysis but most organisations are seeking a solution that is time saving, well priced, easy to use and reliably delivers services that enable a company to meaningfully advance their ESG agenda, identify risks and opportunities and report a simple shareable picture of ESG achievements that is trustworthy.
This comprehensive document details a company’s progress on its environmental, social, and governance initiatives. ESG reports typically detail environmental information like carbon emissions, pollution and how it is mitigated, waste and recycling strategies as well impacts on biodiversity and habitat. A company will also use the report to measure its social outcomes for human rights, health and safety, data protection and privacy, gender and diversity, community relations. It will also measure the Governance of a company and look at issues like board diversity, business ethics, audit committee structure, financial transparency, corruption, lobbying as well as phenomena like whistle-blower programmes.
What benefits will an ESG report deliver?
An effective ESG report will give external stakeholders a clear understanding of the company’s priorities and future objectives and how those priorities are being met. Additionally, an ESG report can be used as a tool to benchmark a company’s progress against its peers to assist consumers, employees and investors to make informed decisions about the nature of businesses with which they engage. Consumer, regulator and investor confidence are critical indicators of business stability and future growth.
Perhaps more critically an ESG report provides business leadership with internal insight that delivers an immediate raft of valuable benefits. An ESG report provides a roadmap to unlock enterprise value through securing the stability of supply, reduction of waste, lowering of inputs, early mitigation of risks, building stronger organisational culture and elimination of legacy issues.
Control and Stability
Despite the benefits, some companies are reluctant to provide transparency when it comes to their ESG performance. The concern is typically that making public disclosures or giving undertakings related to goals may overcommit the business. Further there is the fear that the brand reputation could be harmed as a result of negative scrutiny of findings in the report. Certainly there is value in taking a measured approach with initiating any new business strategy but as the nature of many ESG standards are compulsory, it is more beneficial to commit to single orderly reporting process than to manage multiple requests for disclosure and risk inaccurate or contradictory reporting.
It is important to note that when you produce an initial ESG report it begins its life as an internal document. The public disclosure of information is a matter for your organisational communications strategy and you may identify opportunities for immediate mitigation or growth before making your ESG progress public. While the lawful operation of a company requires appropriate corporate governance the sharing of optional information remains at the discretion of the business leadership.
What do I need to consider when choosing an ESG data platform?
Since there are more than 500 standards internationally grouped in many frameworks, you should consider a platform that provides an intuitive user experience to navigate the concise collection of relevant information without the need for expert analysts within your company. Your selected platform should take the hard work out of reporting to make it simple, timely, accurate and verifiable. Further it should maintain a live view of your company performance relative to your benchmark and give you a sharable viewpoint that is consistent across all of your stakeholder groups.
What to look for?
- Ease of Use: An intuitive user experience that does not require particular ESG analyst expertise. Using the platform should not be difficult or time-consuming and completion of reporting should be achievable by members of staff following a platform guided experience. It should also offer support if you need help along the way.
- Integrated: ensure the platform you choose is an ESG global solution that is compatible with the systems you already have in place and can communicate with your external stakeholders like suppliers, investors and regulators.
- Comprehensive reporting: the ESG data platform you choose should offer comprehensive reporting capabilities, so that you can tell your company’s sustainability story in the most impactful way possible. This could include features such as data visualization tools and customizable templates.
Your ESG journey can start now! Given the simplification of reporting enabled by dedicated built for purpose platform, especially one that leverages AI to decode the challenges of ESG analysis to provide a simple user experience, there is no reason why your company cannot begin to benefit from the insight ESG afforded by reporting immediately. Also, mandatory public disclosure is already occurring thorough governance reporting. The insights created from additional disclosures can inform business strategy as soon as they come to light. The selection of the right platform solution will enable your business to embark upon a controlled process of discovery, disclosure and progress to deliver measurable benefits to the triple bottom line and to provide your stakeholders in the enduring confidence of business leadership, sound ESG strategy and optimised outcomes for business, people and our planet.